RCG June 2019 balance sheet adjusted to $15M (1)
During the pre-production activities, the Company experienced significant cost overruns.
It is the opinion of some that RCG assets go for as little as $15M on poor demand. no leverage.
Below is an estimate of the June 30, 2019 PwC balance sheet
(See note 5)
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)
Exploration assets 1,278,257 (3)
Development property 9,360,761 (1)(2)
Shell & tax credits 0 (5)
Total Assets 15,000,000
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
SISP/DIP 2,200,000
Shareholder equity ( 5,34,739)
Total Liabilities 15,000,000
shares outstanding 174,790,696 shares
book value = (3.2c/sh)
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Notes:
1)
Dufferin is 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.
Some believe that total asset value is 15,000,000. The Dufferin development property has been adjusted to 9,360,761 so that the total asset value is 15,000,000.
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 no leverage in negotiations.
In this scenario, Dufferin sells for below cost. All improvements are lost.
purchase price 2016 9,870,602
+ improvements 2017 (509,841)
+ improvements 2018 0
+ improvements 2019 0
= Total 9,360,761
Improvements are up to June yearend.
For further details see June 2018 Annual Report pg 20.
2)
Is the development property worth $9.4M 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 assuming 60% de-risking
58,000oz indicated * $412/oz * (1-60%) = $9.4M
58,000oz indicated
216,050oz Total ounces recovered
10 years of mine life
= 2.7 years to mine indicated gold
Atlantic was sold for $440/oz.
It had a much deeper pipeline.
3)
Conservative estimate of in-situ gold at Tangier Forest Hill
500,000oz * $5/oz = CAD$2,500,000
4)
For sake of simplicity we can assume the Plant and equipment counterbalance the conservatively priced Exploration properties.
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
6)
Estimate of PwC balance sheet originally posted on March 19, 2019
https://stockhouse.com/companies/bullboard?symbol=v.rcg.h&postid=29507943