RCG balance sheet update
my estimate of the balance sheets
Dufferin, Tangier, Forest Hill were sold to 2672403 Ontario Inc (Eric Sprott).
RCG is reduced to a shell with significant liabilities.
Below is an estimate of the two balance sheets
---
2672403 Ontario Inc (Eric Sprott)
ASSETS
Exploration assets 1,278,257 (3)
Development property 6,996,063 (1)(2)
Total Assets 8,244,300
LIABILITIES
Shareholder equity 8,244,300 (was Credit Facility)
Total Liabilities 8,244,300
---
RCG
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 (4)
Shell & tax credits 0 (5)
Total Assets 4,360,982
LIABILITIES
Accounts payable 7,270,353
Promissory notes 103,551
Asset Retirement 569,535
Deferred tax liab. 2,147,000
Shareholder equity (5,729,457)
Total Liabilities 4,360,982
shares outstanding 174,790,696 shares
book value = (3.3c/sh)
---
Notes:
1)
Dufferin has undergone various improvements and is "near production ready". Bulk sampling is complete. That said, during the pre-production activities, the Company experienced significant cost overruns.
The Dufferin development property has been adjusted to 6,996,063 so that the purchase price is 8,244,300.
Improvements to reach "near production ready"
purchase price 2016 9,870,602
+ improvements 2017 6,713,704
+ improvements 2018 7,872,214
+ improvements 2019 1,197,178
= Total 25,653,698
Improvements adjusted for "cost over-runs" and insolvency process.
purchase price 2016 9,870,602
+ improvements 2017 (2,874,539)
+ improvements 2018 0
+ improvements 2019 0
= Total 6,996,063
Improvements are up to June yearend.
For further details see June 2018 Annual Report pg 20.
2)
Is the development property worth $7.0M per balance sheet ?
pg 5 of MD&A June 2018, pg 207 of PEA
$89.2M Post-tax NPV
216,050 Total ounces recovered
= $412/oz
Value of Dufferin's indicated gold
$7M/58,000oz = $121/oz
3)
Conservative estimate of in-situ gold at Tangier Forest Hill
500,000oz * $5/oz = CAD$2,500,000
4)
I assume the Plant and equipment still belong to RCG.
5)
Off-balance sheet items
RCG has significant, $20.8M, tax loss credits that can be used in production to de-risk the project.
The value of the tax credits has not been market tested.
market value = 1/2 tax credits or $10M.
Investments at 14c also suggest a value of $10M.
The value of the RCG ticker has not been market tested.
Assume the ticker is worth $2M
PwC suggests the remaining assets and off-sheet items have no value.
6)
Estimate of PwC balance sheet originally posted on March 19, 2019
https://stockhouse.com/companies/bullboard?symbol=v.rcg.h&postid=29507943
7)
Eric Sprott still holds 34M shares of RCG.