Resource Capital Gold Corp GDPEF

Sale of Dufferin for 20 million?

[damianchosenone]

Too much? Too little? Unrealistic?

[LeftBook]

How much tax-loss credits would $20M absorb ? 

[damianchosenone]

Sell the entire company for 40 million including all the tax credits. Worth it?

[LeftBook]

What would the 2017 offer look like today ?     My understanding is that ANX made an offer in 2017 to acquire the entire business for 25c. As such it would acquire entire balance sheet and any off-balance sheet items such as tax credits.      Using a back of the envelope approach, I break down the 2017 offer and attempt to create a 2018/2019 equivalent. 

[damianchosenone]

So left book without doing any calculations and with present state of company in mind, how much do you think they sell dufferin for? Does someone offer 30 million if they are halted?

[LeftBook]

$30M is a good first approximation of the value. dunno about the rest.

[damianchosenone]

Spoke to someone that used to work at rcg. Believes that Dufferin will sell for between 7 and 10 million. Forest Hill for 2.

[LeftBook]

>Believes Dufferin will sell for between 7 and 10 million.   Sounds like a fire-sale price for a development property with bulk sampling complete and "close to  production ready" (per McBain's post Feb 16)   Also note that gold sales of $8.82M carried 37% of the $23.67M development additions.     running balances of Dufferin spring 2017

[therager]

I am pretty sure this is what a fire sale looks like.  It is not Sprott Lending's job to go out and maximize shareholder value.  It is their job to protect their credit which is now $10.7M.  In addition, I find it less than credible that there are a whole lot of suitors lined up to take on this project unless they get a fire sale price.  To think ANX is going to pay $30M

[damianchosenone]

It is a fire sale!  Its Black Friday! If it wasn't a desparate fire sale, they would have negotiated to sell the properties prior to any kind of court hearings or stay of proceedings. Normally, when a company does a stay of proceedings to make a proposal, they don't sell their assets, but instead make some deal to operate on their current assets to produce gold and pay back the

[therager]

Now you get it Damian!!!

[damianchosenone]

Then again, RCg does have the additional 8 km of claims next to Dufferin that they acquired after the Deal they signed with Sprott Lending in December 2017; they acquired as per February 2nd. 2018 news release. I also realized that they acquired the Defferin property as per October 2016 News release for 9 million USD. Since then, they have spent millions on refurbishing equipment, getting mine

[kenmar]

 They haven't paid for that land as well. Said they were negotiating for an extension or something in the last few company statements. 

[kenmar]

 Now that you mention that deal Damian, they were to pay 750k by the end of June, I think. Which means they thought they would have a successful PP and would be selling lots of gold to cover it in that short 4 month period. 

[therager]

Damian--you vacillate so readily between desperation and hope.  Once again, on the face of it, the most logical outcome is Sprott Lending taking control of the assets.

[damianchosenone]

Wel if that happens, Rch keeps their 20 million tax credits and remains a company as a Shell!

[therager]

And the shell equity holders get massively diluted to the point where their shares are worth next to zero!!

[damianchosenone]

You sure?  Right now the share price is a penny! if the tax credits are 20 million then, the value of the shareholder's shares is worth about 7 million 7/170 million = 4.1 cents A lot more than it is worth right right now. Also a company may join them for the tax credits that needs then to offset their profits.

[kenmar]

 Think you're overvaluing what the tax credits are really worth to a company. It's not par value. 

[damianchosenone]

I valued the 20 million tax credits as about 35 percent of that.

[LeftBook]

I estimated an NPV of the tax credits using the tax costs of the Dufferin PEA.   1) invest $9M pay $30M of tax (actual PEA numbers are 9.8 and 32)    2) scale by 2/3 to get to $20M invest $6M pay $20M of tax   3) hence $20M of tax credits should have $6M of present value $6M/175M shares = 3.4c This is ball park estimate. I am not a tax guy. Note: $6M is

[damianchosenone]

We as shareholders should be getting more than 3.4 c a share. Dont forget the other properties and the additional.properties by Dufferin

[LeftBook]

The development of Dufferin will result in over $30M of taxes over 10 years according to the NPV calculation. The supposed $20M of tax-loss credit might reduce that to $10M of taxes payable.  Tangier's NPV calculate might have different tax consequences. I would pick the lower of the two for my estimate. I would only pick one if both generated over $20M of taxes. The $20M of

[damianchosenone]

So just the tax losses are wroth 3.4 cents. Can we sell Tangier, Forest Hill and Dufferin and all the mining equipment for 25 million? If so, then add another 5 to 6 cents a share. The market for equity buying and financing if higher now and gold is going up which means if you add the original value of Dufferin from 2 years ago as 12 million Canadian and add all the development, Pea's and

[LeftBook]

Bulk sampling was recently (cough) completed at Dufferin  from page 207 of the PEA  year 1 cash flow  : $10,715,499 (post tax, post interest, etc) $10.72M/175M = 6.1c/sh profit adding back $3.55 of taxes from the tax loss credits $10.72 + $3.55M = $14.27M  $14.27/175M shares = 8.2c/sh The company does not have the $13.7M of cash to fund the operating costs. Nor does

[damianchosenone]

Where did you get the 13.75 operating costs from?

[LeftBook]

$13.73M ($13,729,000) total operating costs are for year 1 see  pg 207 of PEA  --- It is part of the NPV and IRR calculations. The calculation of the NPV and IRR numbers are down on page 207 of a document called "Preliminary Economic Assessment Dufferin Gold Deposit, Nova Scotia". It is clearly bannered as an "ORDER OF MAGNITUDE STUDY".   The document

[LeftBook]

3.4c/sh at 175M shares. dilutions go up and down with the tide.  I prefer ... $20M of tax credits should have $6M of present value As a sanity check. $7.75M of taxes in the first two years from the PEA year 1 : $3.55M year 2 : $4.20M

[LeftBook]

excellent description Damian.