Dundee Corporation

Dundee Corporation reported pretax profit of $10.2 million in Q3 2022 versus a pretax loss of $47.8 million in Q3 2021. Consolidated revenues were $2.6 million, down from $4.8 million a year ago. Net income from portfolio investments excluding GCIC was $19.4 million, compared with a loss of $40.5 million in Q3 2021, and the market value of publicly traded securities rose to $126.7 million from $118.6 million at June 30, 2022. Consolidated cash at quarter-end was $45.6 million. Forward-looking commentary included expected maiden resource timing at Reunion Gold in 1H 2023 and continued work with Aura Minerals on Borborema, with management hoping for construction-phase progress in the new year; no formal companywide revenue or EPS guidance was given.

Jonathan Goodman framed the quarter around five strategic themes: converting Big River Gold into a 20% JV interest in Borborema, which he said gives Dundee direct access to project cash flows; highlighting TauRx as potentially very valuable; and emphasizing the scale potential of Reunion Gold and Magna Mining. His tone was upbeat on the portfolio and especially bullish on TauRx and Reunion, but he also stressed a need to keep cutting corporate costs in an environment of higher interest rates. He said the company will report more on cost reductions in the new year.

Lila Manassa Murphy focused on the financial turnaround and the balance sheet. She cited pretax profit of $10.2 million, the $19.8 million gain on the investment portfolio, $2.6 million of revenue, and $45.6 million of consolidated cash at quarter-end. She also noted the $3.4 million top-up payment to reach a 20% interest in Borborema, an initial carrying value of $17 million for that entity, and explained that Q3 consolidated G&A was $6.7 million, including a $1.7 million one-time Montreal lease termination payment; excluding that item, consolidated G&A would have been $4.6 million, down about 9% year over year. Head office G&A excluding stock-based compensation was $4 million, or $2.3 million excluding the lease charge, unchanged year over year.

The main analyst question focused on TauRx: whether the lack of a traditional placebo in the Alzheimer’s trial could complicate approval and how long the path to approval might take. Goodman argued the placebo issue is misleading, saying the drug’s urine discoloration made a conventional placebo difficult, but that regulatory pathways exist without a placebo and that the key point is TauRx showed cognitive improvement in early Alzheimer’s/mild cognitive impairment. He also said timing is uncertain and compared the approval process to environmental permitting, where management cannot control the schedule. On valuation, Goodman and Murphy said Dundee had not yet written the investment up to the warrant exercise price; the September 30 carrying value was about CAD38 million.