RE:RE:tax credits again
The tax credits story again.
Backing up further in time to see where we have come from.
Hopefully it is useful to understanding the perspective of other shareholders.
The story is a tale of share dilution. Sometimes to the benefit of shareholders and sometimes not.
The shares also went through a 5:1 share consolidation in 2016.
Consolidation is not at significant part of the tale. Post consolidation numbers are used throughout. Long term shareholders will notice that the story starts with 24.4M shares in 2014 instead of 122M shares. See note 2.
===
June 2014 annual report
8.5M assets
- 3.4M liabilities
= $5.8M shareholder equity
tax credits = 50% * $14.5M = $7.2M
(5.8M.1M+7.2M)/24.4M shares = 53.3c/sh
The Indonesian properties were written off in 2016.
Debt free the assets might have been worth 4.8c today.
8.5M/175M = 4.8c
===
June 2015 annual report
7.6M assets
- 4.0M liabilities
= $3.6M shareholder equity
tax credits = 50% * $14.7M = $7.3M
(3.6M.1M+7.3M)/24.4M shares = 44.7c/sh
===
June 2016 Annual report
0.8M
-3.4M
= -2.6M
tax credits = 50% * $14.0M = $7.0M
(-2.6M+7.0M)/45M shares = 9.8c/sh
The shares were underwater after a $8M write-off of the Indonesian properties.
Importantly the tax credits remain largely unchanged after the write-off.
The $1M private placement helped shore up the balance sheet.
On balance it seems to have been a risk reward investment for the subscriber.
The subscriber received 20M shares for 5c/sh. See note 3.
In short there were 45M shares that were underwater but had significant tax credits.
The Company also entered into a joint venture to develop the Corcoran property. RCG sold its stake in the business year ending in June 2018. It is small part of the story in the year ending in June 2016.
===
June 2017
25.0M
- 16.5M
= 8.5M
tax credits = 50% * $15.1M = $7.5M
(8.5M+7.5M)/123M shares = 13.0c/sh
Dufferin, Tangier and Forest Hill were purchased in the business year ending June 2017.
Preparations were made for bulk sampling.
There were private placements at 20c.
The per share book value grew over the year.
The tax credits represent ...
1. a significant portion of the underlying value, or
2. an important margin of safety, or
3. both
===
June 2018
33.0M
- 19.9M
= 13.1M
tax credits = 50% * $20.8M = $10.4M
(13.1M+10.4M)/175M shares = 13.4c/sh
Bulk sampling was carried out the year ending June 2017.
The project was arguably underfunded.
===
Notes:
1)
Total tax credits are comprised of non-capital losses and resource and other pools.
tax credits
2014 $14.5
2015 $14.7
2016 $14.0
2017 $15.1
2018 $20.8
assumption is that the tax-credits could be sold at 50% of their value.
eg 50% * $20.8M = $10.4M
2)
June 2016 Annual Report available on SEDAR
On February 26, 2016, the TSX-V approved the Company’s share consolidation on the basis of one post- consolidation common share for every five pre-consolidation common share, which took place on February 29, 2016. As a result, the number of shares presented in these financial statements, stock option exercise prices, and the calculated weighted average number of common shares issued and outstanding for the purpose of the earnings per share calculation are based on the post-consolidation shares for all years presented.
5:1 consolidation
pre-consolidation 122.0M shares
post-consolidation 24.4M shares
eg
pre-consolidation 10c/sh
post-consolidation 50c/sh
3)
On June 9, 2016, the Company completed a non-brokered private placement of 19,810,544 common shares at a price of $0.05 per common share for gross proceeds of $990,527. The Company issued 1,100,000 shares to third party finders in relation to this non-brokered private placement.