Dundee’s DPM Stake Equals Company’s Total Enterprise Value – Free Option On Everything Else

By Jim Roumell:

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Investment Thesis: Large margin of safety to a conservative case NAV in a SOTP analysis. Today, Dundee is principally a passive investor in a slimmed down portfolio with interesting core assets, anchored by its 20% ownership in publicly-traded Dundee Precious Metals (DPM), the value of which now equals Dundee’s total enterprise value. The company has no real capital commitments going forward as a result of monetization and restructuring events, executed over the past few years. Moreover, Dundee is in front of more monetization events, and likely share buybacks given the company’s deep commitment to deliver value to shareholders after several years of destroying capital (under previous management regimes), in our opinion.

Dundee has no funded debt, and its leverage is solely through the use of perpetual preferred stock that has no maturity date, allowing it to control a significant number of assets with the benefit of a permanent capital structure. Dundee enjoys the benefits of leverage without the typical risks, i.e. refinancing.

We wrote-up Dundee in April 2018…


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