New Capital
Contrarian, deep value, long/short equity, special situations

Dacha: Cash Burning With Overstated Book Value

I am writing this in response to Saj's recent article on Dacha Strategic Metals (OTCPK:DCHAF or DSM in Canada). Saj's investment thesis can be briefly summarized in below listed points, which I will address in my write-up:

1) Investors would be buying company below book value, which is mostly comprised of cash and inventory of precious metals;

2) Value orientated activist investor became CEO of the company and thus capital allocation practices are likely to improve;

3) Further value likely to be realized through potential acquisitions and realization of NOLs.

Book Value

Let's start with book value. In the latest published financials (Sep 2013) it stands at $18.5m vs current market cap of 9.5m (options and warrants can be...

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