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spk00: Good morning, everyone. Welcome to the Dundee Corporation's second quarter 2021 results conference call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions as could constitute forward-looking statements that are subject to risk and uncertainties relating to Dundee Corporation's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Dundee's Corporation's second quarter 2021 management discussion and analysis and other periodic filings and registration statements. You can access these documents at under the company's profile at cedar.com. I'd like to remind everyone that this conference call is being recorded today, Thursday, August 12th, 2021. On this call, management of Dundee Corporation will be quoting dollar figures. All figures are in Canadian dollars unless otherwise noted. Participating on this call will be Jonathan Goodman, President and CEO of Dundee Corporation, and Lila Manasseh-Murphy, Executive Vice President and CFO of Dundee Corporation. At this time, I would like to introduce Mr. Jonathan Goodman to provide an update on the quarter. Please go ahead, Mr. Goodman.
spk02: Thank you, Operator. Good morning, everyone, and thank you for joining us today. With me on the call is Lila Manasseh-Murphy, Dundee's Executive Vice President and Chief Financial Officer, who will go over our financial performance. Dundee Corporation released its second quarter 2021 financial results at market close yesterday. You can find our consolidated financial statements and MD&A on the Dundee Corporation website and under our profile on cdar.com. Turning to slide four, Dundee Corporation continued to execute on its strategy of accelerating our transformation, bringing the company back to its roots as a mining-focused, active investor delivering long-term sustainable value for its shareholders and partners. The second quarter of 2021 was characterized by further progress and momentum across all three of our strategic objectives, which are doing more mining deals, rationalizing our legacy investment portfolio of non-core assets, and reducing our run rate corporate G&A and cash overheads and streamlining our capital structure. Moving to slide two, in Q2, our mining group through Dundee Goodman Merchant Partners was active in identifying, de-risking, and investing in mining companies with significant value propositions. We grew our position in several high-quality mining companies. We exercised warrants to increase our stake in maritime resources to 19.96%. Maritime is developing the Hammerdown Gold deposit in Newfoundland, which we believe will have a low startup capital cost and a quick payback. We believe the project has significant exploration upside as was further evidenced by the high-grade intercepts announced last month. We also feel that they have a great management team in place. We increased our holding in Reunion Gold. Additionally, DGMP participated in the syndicate for a brokered private placement to raise an additional $3 million for Reunion Gold. We see solid potential for Reunion Gold. Reunion Gold is an exploration and development company working in the Guyana Shield. which is among the most prospective yet most underexplored gold districts in the world. As mentioned in our last quarterly call, we increased our stake in Western Australian gold producer, gold explorer, Osgold, from 7% to 9.9% in a placement participated in by DGMP. In April, Osgold updated their gold resource by 28% to 1.54 million ounces. We believe that they continue to unlock significant value through further exploration. We also added two new investee companies to our portfolio. In May, we acquired approximately 10.5% of Magna Mining, a base metals exploration and development company in the world-class Sudbury Mining District, with a large unexplored land package that is highly prospective for nickel, copper, and PGM. Subsequent to Quarter End, we acquired a 6% stake and Australia-listed Mako Gold Lines. Mako is focusing on discovering high-grade gold deposits in West Africa. Mako are currently accelerating their exploration and drilling program to extend already-identified high-grade gold mineralization at the Napier Gold Project in Cote d'Ivoire. Overall, our portfolio of high-quality, well-run, investee companies continues to advance their impressive deposits towards the construction phase and closer to cash flow generation. We remain committed to working with our investing companies throughout this process as trusted long-term advisors and partners. We will share our team's demonstrated knowledge and expertise across all aspects of the mining business to ensure that we can maximize value of these assets and eliminate as much risk as possible. Looking at slide six, our mining investment portfolio was down quarter over quarter, which is attributed to the volatility of the valuations of gold-based metals and mining stocks due to growing concerns of inflation and rising number of COVID-19 variant cases. Despite the volatility we saw this quarter, it is important to keep in mind that we are disciplined investors who are investing for the long term in well-run companies with solid upside potential. The decrease in asset under management is due to market depreciation of $4.8 million and redemptions of $2 million. During Q2, Goodman & Company Investment Council recognized financial services revenue of $900,000 from the services provided by Dundee Goodman Merchant Partners, a division of GCIC, consisting of finders and advisory fees compared to $200,000 in the year-ago period. Looking ahead, our mining team will continue to be active in identifying and evaluating attractive investment opportunities and ways to generate cash flow. As mentioned on the last call, We want to be generating more fee business by attracting third-party capital to deals. The ability to do this at scale will give us the opportunity to increase our participation in deals we like and grow our positions in these companies. Turning now to slide seven, the strategic objective of rationalizing our non-core legacy portfolio of operating companies is a major priority, and we continue to demonstrate progress on this strategic objective in Q2 of 2021. We advanced the divestitures of several non-core assets in Q2. But as I have said before, communicating our progress on these deals is challenging since you cannot announce anything until it's complete. Multiple discussions for the sale of the beef division of Blue Goose remain ongoing. The wildfires in British Columbia present challenges to ongoing on-site due diligence of the Blue Goose beef division. While none of the Blue Goose ranches have been directly impacted by the wildfires, These challenges have slowed the process more than anticipated. That said, we continue to work towards a deal. Subsequent to quarter end, on August 10th, the corporation entered into an amending agreement to monetize its loan with aid capital of $15 million. The payments are to come in three $5 million installments, one expected next week, one before the end of the year, and a final payment in early 2022. The amending agreement is subject to IROC approval, As I have mentioned on past calls, rationalizing our legacy portfolio is something that is critical to our transformation as a company and something we have resolved to accelerate in 2021. To this end, in late June, we appointed Stephen Sharp as an executive vice chair of the company with a mandate to facilitate the rationalization of our legacy portfolio while minimizing the operating company's cash drain on the business. wherever possible. Mr. Sharpe is a seasoned executive with a wide breadth of public company experience. His experiences range from legal practice to corporate strategy to restructuring to investment banking to C-suite leadership. His skill set fits extremely well with this mandate. We look forward to updating the market with more details as these deals materialize. Welcome, Stephen. Moving to slide eight. We continue to work towards driving down our run rate G&A in the second quarter of 2021. We are strongly committed to reducing our cash overheads in 2021 to a level that is more sustainable and more closely aligned with the interests of management with our shareholders. As Lila will mention in more detail later in the call, we reduced corporate G&A costs in Q2 2021. We conducted detailed cost reduction planning and evaluated our existing cost centers in Q2 to look at opportunities for bringing our run rate down further. We have identified a number of areas where we can reduce our run rate G&A costs in areas such as real estate, IT, and insurance. We intend to be more aggressive on this through the remainder of the year. With regards to streamlining our capital structure, our normal course issuer bid to purchase for cancellation Up to 10% of the public float on the company's Class A subordinate voting shares, as well as our cumulative five-year rate reset, first preference Series 2 and Series 3 remains in place. Streamlining our capital structure aligns with our goal of returning cash to shareholders when appropriate. At the current share price, we consider these transactions to be prudent uses of capital and good investments. Before I hand the call over to Lila Manassa Murphy to provide an overview of our financial results, I would like to welcome Lila, who was appointed to the role of Executive Vice President and CFO midway through the quarter and hit the ground running. We believe Lila's skill set and asset management experience will be invaluable in helping us realize our transformation, especially in terms of optimizing our G&A run rate and streamlining our capital structure. And with that, I'd like to turn the call over to Lila.
spk06: Thank you, Jonathan. Before I get started, I'd like to just provide our stakeholders with a bit of background. I met Jonathan in 2008 when I was managing money and he was CEO of Dundee Precious Metals. I witnessed the transformation and success of that company through significant operational, technical, and social challenges. After many years of conversations with John about prudent capital allocation, I joined the Dundee Corp board in August of 2018 and have watched this company evolve over the last two and a half years plus. While there is some very heavy lifting to do in terms of recycling capital from non-core businesses into the core strategy, I see an exciting opportunity here. I want to thank John and thank the board for this opportunity. I would also like to say a very special thank you to every single one of the Dundee Corp employees who have stepped up and functioned exceedingly well in an environment of unprecedented change and uncertainty. I speak on behalf of management and the board when I say that we appreciate your hard work and diligence in this time of transition. When we are successful, it will be because of your efforts. Turning now to slide 10. Dundee Corporation incurred a pre-tax loss of $11.5 million in the second quarter of 2021, compared to earnings of $52.2 million in the second quarter of 2020, driven largely by the decline in fair value in UHIC. The company generated consolidated revenues of $4.9 million, compared to $3.9 million in the second quarter of 2020. The market value of our publicly traded securities decreased to $100 million as of June 30, 2021 from $121 million at March 31, 2021, reflecting a pullback in several key commodity markets. Our portfolio's investments carried at fair value through profit or loss had a valuation decrease of $25.1 million from $234.3 million at the end of the first quarter of 2021. to $209.2 million at the end of the second quarter of 2021, primarily from the aforementioned market factors and the proceeds from the completion of the Dundee Precious Metals Warrant Exercise Program of $32.9 million. Moving to slide 11, operating results during Q2 of 2021 reflect an $800,000 market appreciation as compared to $92.1 million in Q2 2020. The 2020 market appreciation is net of a $5.2 million transaction cost for the disposition of the DPM unit. Net income from investments during the second quarter of 2021 includes $500,000 in dividend and interest income distributed from our portfolio investments. compared to $700,000 in the year-ago period. Looking at our operating subsidiaries' performance for the quarter, as Jonathan mentioned, Goodman Company Investment Council assets under management decreased from $80.6 million in Q2 2021 to $73 million in Q2 2021. Again, this was attributable to market depreciation of $48 million and redemptions of $2 million. During the second quarter of 2021, this segment recognized a pre-tax loss of $200,000 compared to $700,000 in the year-ago period. UHIC reported a pre-tax loss of $12.4 million in the second quarter of 2021 compared to a $17.1 million loss in Q2 2020. This is due almost entirely to the non-cash fair value change in the world heat interest and associated contingent bonus payments of $12.1 million. This fair value change was driven by the COVID-19 pandemic, the political conditions in Africa, and the material, operational, and financial developments at Delinex Energy Limited. The company's carrying value of its 84% interest in UHIC is approximately $20 million at June 30th, 2021. As Jonathan mentioned earlier, multiple discussions for the sale of Blue Goose's beef division remain ongoing. And as a result, the associated assets and liabilities of the beef division were reclassified as assets and liabilities held for sale in the consolidated statements of financial position. The operating results of the beef division are now classified as discontinued operations in the consolidated statements of operations. Blue Goose generated pre-tax earnings in the second quarter of 2021 at $600,000, of which $1.3 million was generated by discontinued operations, offset by a pre-tax loss of $700,000 incurred by the continuing operations. This compares with the $3.3 million pretax loss incurred in the year-ago period, of which $1.7 million and $1.6 million were incurred by discontinued operations, discontinued and continuing operations, respectively. Dundee Sustainable Technologies incurred a pretax loss of $800,000 in the second quarter of 2021, compared to $100,000 in the second quarter of 2020. Second quarter 2021 revenue was $1.4 million, up from $1 million in the year-ago period. AgriMarine reported a pre-tax net loss of $900,000 in the second quarter of 2021, with sales revenues of $1.7 million compared with $800,000 and $1.9 million, respectively, in Q2 2020. Subsequent to quarter ends, late last week, there was a temporary loss of power related to swapping out a gem set at the agri-marine facility, which resulted in a subsequent lack of circulation and oxygen in the tanks. While it is too early to know the precise impact, we do know that there has been inventory losses, which will result in lower levels of operating cash flow in future quarters from this division. During the second quarter of 2020, One, Dundee 360 generated pre-tax earnings of $200,000 compared with the loss of $200,000 in the year-ago period. And the equity accounted losses were $200,000 in Q2 of 2021, primarily driven by a write-down of Dundee acquisition compared to a $4.7 million loss in the prior year period. The 2020 loss included a $2.8 million loss on Dundee 3S. Turning to slide 12, the second quarter of 2021 consolidated G&A inclusive of stock-based compensation was $4.7 million compared to prior year of $7.4 million from continuing operations. Excluding stock-based compensation, consolidated G&A was $4.7 million in the second quarter of 2021 compared to $7.3 million in the prior year period. Head Office DNA, excluding stock-based compensation for the second quarter, was $900,000, compared to $4.3 million in 2020, a 79% decrease. At quarter end, we had $90.9 million in consolidated cash, up from $72.5 million at the end of Q1 2021. This is reflective of the proceeds from the DPM warrant exercise, offset by ongoing investment in the mining portfolio. We have had no significant developments with the CRA and continue to have 13.8 million on deposit regarding the 2014 to 2016 tax years. This amount is separately disclosed on the balance sheet as deposited with taxation authority. That concludes my comments. Back to you, Jonathan.
spk02: Thank you very much, Layla. Turning now to slide 14. Dundee Corporation's progress in Q2 2021 continues to set the stage for our transformation. I am pleased with our team's execution against all of our strategic objectives and the momentum we are building. In Q2 2021, we took steps to accelerate our transformation by appointing dedicated key senior executives with the right skills to make impactful progress on each pillar of our strategy. There is more work to be done, and we have the best team in place to do it. Looking ahead, we remain committed to structuring and focusing our business to support continued growth and profitability. Before we open up the Q&A, I'd like to reiterate Dundee's main long-term corporate priorities for the remainder of the year. They are identifying and de-risking attractive mining investment opportunities and doing more private equity-style mining deals. reorganizing DGMP into a dealer group and private equity-style group to position the dealer group for profitability, accelerating the rationalization of our non-mining legacy investment portfolio, reducing our corporate G&A expenses and bringing down cash overhead to align the interests of management more closely with shareholders, and streamlining our capital structure to return cash to shareholders when appropriate. These initiatives will allow us to more efficiently allocate our capital, focus the business on where we are strongest, and can achieve the best returns, putting us in the best position possible to deliver and maximize value for all of our shareholders, stakeholders, and partners. To close, I'd like to thank our shareholders and partners for their continued support and confidence in our team. I would also like to thank the entire Dundee team for the extra work they continue to put in operating in this pandemic environment. I look forward to updating the market on our progress next quarter. Have a great day. And now, operator, I'd like to open the line for questions.
spk00: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have any questions, please press star followed by one on your touchtone phone. You'll hear a three-tone prompt acknowledging your request and your questions will be pulled in the order you receive. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift your hands up before pressing any keys. One moment for your first question. First question comes from Brandon Moyes with Strongway. Brandon, please go ahead.
spk01: Hey, Jonathan. Hey, Laila. How are you? Good morning. Good morning. So first, I just wanted to understand the aid capital loan and amendment a bit better. So just with the existing loan, the $12.4 million that's currently outstanding, What was the maturity of that? Is that December 31st, 2023, or is that a different maturity? Yes. Okay.
spk05: Yes.
spk01: And so it sounds like the balance of the loan has increased and the repayment schedule has accelerated. So what were the circumstances leading to that amendment?
spk02: Well, I mean, from our perspective, I mean, we're trying to monetize all of our non-core assets. From a capital perspective you'll have to ask them, but the reality of it is for them. I think it's a very high cost piece of paper and Because it had a 10% coupon plus a royalty on the business that they did and I Think they just they want to replace it with a lower lower cap the coffin cost of capital piece of paper and for us It's a chance to turn it to cash Got it.
spk01: Thanks And that might play a bit on the next question, but I want to also understand, you know, why Stephen Sharp was putting that role, what necessitated his appointment? Who does he report to? And, you know, you touched on his mandate, but to the extent you can go into a bit more detail on what that entails, that would be great.
spk02: First of all, I mean, Stephen is a very skilled and talented individual. And first of all, he reports to me. as the CEO of the company, and a lot of his skills are around the areas that we need him for, which is taking some of these residual assets, helping work with the management teams of these assets and ourselves to put in a proper plan, either to dispose of them immediately or create a longer-term plan, which will eventually lead to us getting our value out of them. and that will give me more time to focus on the core business of the mining investment portfolio. The necessity to do it was, that's really his skill set, and as an ex-member of our board, we could see that he had some really good skills there, and we took the opportunity.
spk01: Thank you. And just last, if You can clarify something for me. If you're able to look at page 19 of the MDNA, I'll give you a second.
spk05: Okay. Yep.
spk01: So you list the publicly traded securities, and the total there says 100,253. But when I add them all together, the individuals, names, I get 114556. Do you know why that is, or would you be able to look into that?
spk06: We can certainly look into that for you. Okay.
spk02: I suspect the answer is because one of our publicly traded securities is Dundee Sustainable, and we consolidate it. So my guess is that it doesn't count on That's because it's a consolidated entity in our financial statement. But we're going to look into it and get you better than an off-the-cuff remark.
spk01: Okay. It seems like the difference is actually the maritime resources position, but that could be a coincidence. But, yeah, please look into it.
spk05: I don't think so, but we'll look into it. Okay. Appreciate that. Thank you.
spk00: Thank you. Your next question comes from Brett Price with Janie Montgomery Scott. Please go ahead.
spk04: Hi, Jonathan. Welcome aboard, Lila. Thank you. Hey, Brett. Hi. If Mother Nature bears the lands that are part of the assets of Blue Goose, does that make it more of a scarce asset, which would result in maybe a better price when ultimately demonetize the Blue Goose assets?
spk02: It could. I mean, I don't expect Mother Nature to bear all of the assets of Blue Goose, and there are currently no fires on any of the assets right now. But, you know, forest fires are a reality in that part of the world pretty much every year to some extent. It's really just the fact that this year has been especially hot and dry, and it's just made it harder, that and combined with COVID, to get people out there and get a tour because so much of the resources in that area is working on fighting the fires. But, yes, usually when land gets burnt, it actually comes back stronger down the road.
spk04: Right. Jonathan, I'll stipulate, your skill set in making mining investments is very high. But are you open to looking to things as investments that will generate an immediate cash flow to just take some of the pressure off you to cover corporate overheads?
spk05: The answer is yes.
spk04: Okay. Thank you for taking my questions. And, you know, once again, welcome aboard, Lila.
spk00: Thank you.
spk04: Thanks, Brett.
spk00: Thank you. Ladies and gentlemen, as a final reminder, should you have any questions, please press star 1.
spk05: Your next question comes from Rob Lino.
spk00: As a private investor, please go ahead.
spk03: Jonathan, I'm a personal investor. And if I look at it, you spent, or the company has, a fair amount of time on share buybacks in the last couple of years.
spk05: Yeah.
spk03: If I understand the assets held for resale at $69 million and the liabilities at $19 million associated with that, if you sold it for book value and got cash, you would add $50 million in cash. So you take your $90 million and the $50, you're $140 million. Would a value investor like myself look at you and say, okay, you want to invest that as opposed to a longer, slower course of just buying back shares? I'm not asking you to commit, obviously, but Are you kind of through that stage of the company of buying back shares and now taking $150 million or whatever it is, $3 per share, and now investing that?
spk02: You know, I think that the answer is, you know, we look at, you know, capital allocation is a dynamic process. And so you're never through that process. We're always looking at buying back shares. We're looking at buying back preps. and looking at reinvestment opportunities and weighing the balance. I mean, everyone in our team is very much motivated by share price. Myself in particular, I'm a very large shareholder in the company, and we spend a lot of time discussing all of that. So I would never say we're through that stage. We still consider it a part of our capital allocation strategy.
spk05: Okay. Thank you. Appreciate it.
spk00: Thank you. There are no further questions at this time. Mr. Goodman, you may proceed.
spk02: If there are no further questions, I'd like to say thank you very much to everyone and look forward to doing this again next quarter. Thank you.
spk06: Thank you.
spk00: Ladies and gentlemen, this concludes your conference call for today. We thank your participating and ask that you please disconnect your lines.
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