A $21M valuations reduces the shareholder equity to 1.5c
This is based on a sum of the parts analysis. I replace some of the items in the balance sheet carried at cost with estimates of the market value.
RCG had a $25.1M balance sheet in June 2017.
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Key points.
A)
Total Assets reduced to 21,000,000
B)
The liabilities are unaltered.
The shareholder equity becomes at $2,665,261
C)
From the Trustee's report 6.3.3. The value of the Dufferin Mine and the Tangier and Forest Hill exploration properties will ultimately be determined by exposing them to the market.
Tangier 326,700oz $0.84M
Forest Hill 173,200oz $0.44M
They are carried on balance sheet at $1.28M or $2.56/oz
In contrast, ANX acquired the Goldboro project for ~$15/oz in May 2017.
D)
Dufferin Development Property pg 20 of June 2018 Annual Report
9,870,602 Purchase Price in 2016
+ 6,750,602 improvements 2016
= 16,584,306 Balance June 2017
+ 7,872,214 improvements 2017
= 24,456,520 Balance June 2018
+ 1,197,178 improvements 2018
= 25,653,698 Balance Dec 2018
The original purchase price in 2016 is a first order estimate of Dufferin’s value.
There were $15.78M of improvements recorded for the Development property since June 2017. I use a smaller number, $5.490M to represent the improvements. The smaller number partly serves as a plug variable to complete the asset side of the balance sheet.
improvements 5,490,159
The result is that the development property has been given a $10.29M or 40% haircut in this treatment. It may reflect the idea that some have of cheap ounces. A haircut to the development property may result in increased tax credits for RCG if sold separately.
E)
RCG has roughly $20M of tax credits.
They are an off balance sheet item.
They are included as $0 item the balance sheet as a reminder.
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The replaced items are indicated with an asterisk, "*".
ASSETS
Cash 10,559
Receivables 44,254
Prepaid expenses 63,401
Net fixed assets (RCG) 19,910
Land (MGC) 99,270
Reclamation bond 1,070,000
Plant and equipment 3,053,588
Exploration assets 1,278,257 * (C)
Dufferin June 2016 9,870,602 * (D)
improvements 5,490,159 * (D)
tax-credits 0 * (E)
Total Assets 21,000,000 (A)
LIABILITIES
Accounts payable 7,270,353
Promissory notes 103,551
Credit facility 8,244,300
Asset Retirement 569,535
Deferred tax liab. 2,147,000
Shareholder equity 2,665,261 (B)
Other 0
Total Liabilities 21,000,000
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Notes:
1)
pg 7 Dufferin, Tangier, Forest Hill ounces indicated in Goldboro slide deck
May 2017 – Acquired [Goldboro] project for ~$15/oz.
Dufferin 208,000 $3.12M
Tangier 326,700 $4.90M
Forest Hill 173,200 $2.60M
Total 707,900 $10.62M
2)
Exploration assets 1,278,257
Development property 25,653,698
3)
TRUSTEE’S FIRST REPORT TO COURT
February 15, 2019
https://www.pwc.com/ca/en/car/resource-capital-gold-corp-et-al/assets/resource-capital-gold-corp-et-al-014_021519.pdf
Read more at https://stockhouse.com/companies/bullboard#gVIjE5Qr2xopmqgT.99
4)
It does not include the $2.2M DIP financing of Feb 20, 2019.
5)
Dufferin
https://www.rcgcorp.ca/assets/docs/financials/063018-YE.pdf