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Dundee Corporation Announces First Quarter 2021 Financial Results

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·11 min read
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TORONTO, May 12, 2021 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced its financial results for the three months ended March 31, 2021. All currency amounts in this press release are in Canadian dollars except as otherwise indicated.

FIRST QUARTER 2021 RESULTS

  • Advanced core mining-focused investment strategy, growing our portfolio by making significant investments in mining companies.

  • Reduced total corporate G&A costs by 6.3% compared to Q1 2020 and reduced G&A costs excluding stock-based compensation by 9.6%.

  • Generated consolidated revenues of $5.3 million (2020 – $3.0 million).

  • Generated net loss attributable to owners of the Corporation of $19.7 million (2020 – loss of $166.45 million), or a loss of $0.23 per share (2020 – loss of $1.63 per share).

  • On a consolidated basis, the Corporation reported cash of $72.5 million as at March 31, 2021 (Dec 31, 2020 – $122.6 million).

  • Reclassified as held for sale the beef division of Blue Goose Capital Corp. (“Blue Goose”) amid ongoing discussion with potential buyers, indicative of significant progress in rationalizing the non-core legacy portfolio.

Jonathan Goodman, President and Chief Executive Officer of Dundee Corporation, commented:

“Dundee made significant progress on its transformation into Dundee 2.0 – a return to the Corporation’s roots as a mining-focused, active investor. Integral to this new direction are three strategic pillars: doing more mining deals, streamlining our capital and rationalizing our cost structure, as well as making significant progress around non-core asset sales. I am pleased to say that we advanced all three objectives in the first quarter of 2021.”

“We were active in the first quarter of 2021 in identifying, de-risking, and investing in attractive mining investment opportunities. Our team grew our portfolio of mining assets, making investments to increase our positions in several investee companies, most notably making a $14.1 million investment in Big River Gold to increase our stake to 19.38%. We have a strong and growing portfolio of well-run mining companies with exciting, highly-prospective assets. As our investee companies continue to advance their projects toward the construction phase, we are committed to working with our investee companies to deliver value as a trusted advisor with demonstrated knowledge and expertise across all aspects of the mining business.”

Mr. Goodman continued, “We also continued to progress the rationalization of our legacy portfolio of operating companies and engineering orderly, professional exits from business lines that are no longer aligned with our longer-term strategy. Aggressively accelerating this is a major priority for Dundee in 2021. We advanced the divestitures of several non-core assets; one example of this being the deconsolidation of Blue Goose’s beef division. In the second quarter we will also look to exercise our Dundee Precious Metals common share purchase warrants which will bring in more cash to the Corporation. We look forward to updating the market with more details as these deals continue to materialize.”

“We further reduced our corporate G&A costs in the first quarter of 2021, bringing down G&A excluding stock-based compensation by 9.6% compared to Q1 2020. We remain committed to significantly driving down our run-rate cash G&A costs and will be more aggressive on this front in the coming months. We also streamlined our capital structure in the first quarter of 2021 by buying back shares for cancellation through the completion of our substantial issuer bid announced in November 2020, and launching a normal course issuer bid in January. These transactions are prudent uses of the Corporation’s capital and good investments at current share prices, which align with our goal of returning cash to shareholders when appropriate.”

Mr. Goodman concluded, “With another quarter of solid progress in executing against our strategy, the vision of Dundee 2.0 is beginning to come into focus. We know there is still much more work to be done, but we will carry this momentum forward with the ultimate goal of delivering long-term, sustainable value for our stakeholders and partners.”

FINANCIAL RESULTS

Operating results during the first three months of 2021 reflect an $11.5 million market depreciation (2020 – $61.1 million) 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 loss from investments during 2021 is net of $0.7 million (2020 – $3.0 million) dividend and interest income distributed from its portfolio investments.

A number of the Corporation’s investments are accounted for using the equity method of accounting, which requires that the Corporation increase or decrease the carrying value of its investment by its proportionate share of the net earnings or loss of the underlying investee. This method of accounting further subjects the Corporation to significant volatility in its operating performance as the underlying net earnings or loss of the equity accounted investee may be subject to market forces or other events over which the Corporation does not exert control. During 2021, the Corporation recognized earnings from its equity accounted investments, excluding real estate joint ventures, of $0.6 million (2020 – loss of $1.1 million).

In January 2021, the Corporation announced the results of its substantial issuer bid initially announced in November 2020, confirming the purchase of 14,285,715 Class A subordinate voting shares in the capital of the Corporation at a price of $1.40 per share for $20.3 million, including transaction costs of $0.3 million.

In January 2021, the Corporation announced that it would implement normal course issuer bids on its class A subordinate voting shares, cumulative 5-year rate reset first preference shares, series 2, and cumulative floating rate first preference shares, series 3. Dundee may purchase up to a maximum of approximately 10% of the Corporation’s public float on each class of security. During the first quarter of 2021, the Corporation purchased 1,071,714 subordinate shares for $1.5 million pursuant to the normal course issuer bid.

OPERATING SUBSIDIARIES’ PERFORMANCE

Goodman & Company, Investment Counsel Inc. (“GCIC”)

GCIC’s AUM decreased from $84.8 million at the end of December 2020 to $80.6 million at the end of March 2021. The decrease in AUM is mainly due to market depreciation of $6.2 million. During the first three months of 2021, GCIC raised capital of $20.6 million from launching a new tax-sheltered limited partnership, CMP 2021 Resource Limited Partnership. Redemptions of AUM during the same period of 2021 were $18.6 million. During the three months ended March 31, 2021, this segment recognized earnings of $0.2 million (2020 – loss of $0.9 million).

United Hydrocarbon International Corp. (“UHIC”)

As a result of the fair value change of the royalty interest and its associated contingent bonus payments, the Corporation’s 84% owned subsidiary, UHIC, reported a pre-tax loss of $9.8 million (2020 – $117.5 million) during the first quarter of 2021. Due to the COVID-19 pandemic, the political conditions in Africa, and the material operational and financial developments at Delonex Energy Limited, UHIC delayed the estimated first oil production by two years to 2025 in determining the fair value of its royalty interest and associated contingent consideration. As a result, UHIC recorded a $9.6 million fair value loss (2020 – $117.3 million) during the first quarter of 2021, which is included in the March 2021 Interim Consolidated Financial Statements as “Remeasurement of financial instruments”.

Blue Goose

Blue Goose is currently in discussion with potential buyers for the sale of its beef division. As a result, the associated assets and liabilities of the beef division have been reclassified as “Assets and liabilities held for sale” in the consolidated statement of financial position and operating results of the beef division are classified as “Discontinued operations” in the consolidated statements of operations.

Blue Goose incurred a pre-tax loss of $3.4 million from discontinued operations during the first quarter of 2021 (2020 – $1.1 million). The beef division’s operating performance is partially driven by the changes in fair value of its livestock which is subject to volatility from period-to-period changes in the market prices of the commodity and changes in the physical growth of its biomass. In addition, sales are lower by $2.0 million due to the ongoing COVID-19 restrictions. Blue Goose incurred a pre-tax loss of $0.6 million (2020 – $1.6 million) from its continuing operations.

Dundee Sustainable Technologies Inc. (“Dundee Technologies”)

Dundee Technologies incurred a pre-tax loss of $0.8 million (2020 – $1.2 million) during the first quarter of 2021. Due to the outbreak of COVID-19, Dundee Technologies’ Thetford site was temporarily closed as a result of the measures taken by the Quebec provincial government in March 2020. Operations resumed in May 2020 with employees and contractors following the controls and practices that have been established on site. As a result of these safety measures, Dundee Technologies has not experienced any major disruptions since then.

Dundee Technologies expects the primary driver in the coming years will be from its GlassLock Process™, followed by higher upside from its CLEVR Process™ in the long run. Dundee Technologies has received a cash payment of US$1 million in the first quarter of 2021, to renew the exclusive rights on its GlassLock Process™ for a period of one year, as part of a moratorium agreement.

AgriMarine Holdings Inc. (“AgriMarine”)

As the market conditions associated with COVID-19 persist, AgriMarine has continued sales to alternative markets at lower prices to maintain sales volume. AgriMarine earned a $0.1 million (2020 – $nil) interest and other income during the current quarter. During the three months ended March 31, 2021, AgriMarine reported a pre-tax loss of $0.9 million (2020 – $0.9 million) with sales revenues of $1.5 million (2020 – $2.2 million).

SHAREHOLDERS’ EQUITY ON A PER SHARE BASIS

Carrying Value as at

Mar 31, 2021

Dec 31, 2020

Operating subsidiaries

$

94,359

$

97,354

Equity accounted investments

22,255

23,134

Investments carried at fair value through profit or loss

234,272

222,380

Other net corporate account balances

61,404

113,161

Total shareholders' equity

412,290

456,029

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

$

334,200

$

377,939

Number of Class A Subordinate Voting Shares and Class B Shares of the Corporation issued and outstanding

Class A Subordinate Voting Shares

84,620,596

99,977,934

Class B Shares

3,114,491

3,114,581

87,735,087

103,092,515

Shareholders' Equity on a Per Share Basis

$

3.81

$

3.67


BOARD AND MANAGEMENT CHANGES

Ms. Lila Manassa Murphy will resign as a director of the Corporation on May 14, 2021, and on such date, will be appointed Executive Vice President and Chief Financial Officer of the Corporation.

FIRST QUARTER 2021 CONFERENCE CALL AND WEBCAST DETAILS

Dundee’s management will be hosting a conference call for interested investors on May 13, 2021 at 10:00 am ET. Analysts and investors are invited to participate using the following dial-in numbers or webcast link:

Participant Number (Local): 647-427-7450
Participant number (Toll-free): 1-888-231-8191
Conference ID: 6834968
Audience URL: https://produceredition.webcasts.com/starthere.jsp?ei=1459825&tp_key=3c4479c1b7

A replay of the conference call will be available until 11:59 pm (ET) May 27, 2021, and can be accessed using the following dial-in numbers:

Encore (Local): 416-849-0833
Encore (Toll-free): 1-855-859-2056
Encore ID: 6834968

The Corporation’s unaudited interim consolidated financial statements as at the three months ended March 31, 2021, 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: gditomaso@dundeecorporation.com


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